Baltimore’s Board of Estimates is expected to approve the sale of the Senator Theatre to its current operators Wednesday for $500,000.

Senator Theatre LLC, a company controlled by James “Buzz” Cusack and his daughter, Kathleen Lyon, has leased the theater from the city since August 2010. The city bought the Senator a year earlier, as it was nearing foreclosure, then selected Cusack and Lyon to run it.

The father-daughter team also has a 40-year lease on the Charles Theatre, they said. More than a decade ago, Cusack and another partner expanded the Charles, turning it into the Baltimore region’s premier art house theater.

In August, the Baltimore Development Corp. announced that it had agreed to sell the Senator, a North Baltimore landmark, to Cusack and Lyon, but the terms were not disclosed. According to the Board of Estimate’s agenda, Senator Theatre LLC will repay the half-million-dollar, 2 percent fixed-rate mortgage to the city over 40 years.

The Senator is undergoing extensive renovations that began in late April. The improvements will add three auditoriums with stadium-style seating and a cafe to the movie house.

“We should be done in March or April,” Cusack said Tuesday. Interior restorations are under way and the exterior restructuring is expected to begin soon, he said.

The renovations are projected to cost about $3 million, according to the agenda. “Higher than anticipated construction bids” for the improvements caused the city to sell the property instead of moving forward with the current lease, the board’s agenda said.

The city proposed the sale to Cusack and Lyon, Cusack said. Because they already had a long-term lease on the property, it made little difference to them whether they owned it, he said.

The BDC’s acting president, Kimberly A. Clark, has said that the city only intended to hold on to the theater temporarily.

“The city doesn’t want to have a building,” Cusack said. “There were also financing advantages to owning the building.”

Selling the property allows it to be used as collateral for construction loans. The city is lending Senator Theatre LLC $700,000 and the state is offering a $560,000 loan.

Cusack and Lyon are investing $950,000. The rest of the funding will come from grants and historic tax credits, according to the board agenda’s analysis of the sale.

The project is relying on a Maryland Community Legacy grant of $425,000, a facade construction grant of $6,000 and state and federal historic tax credits that should amount to about $400,000. Bank loans will cover the amount of the tax credits until they are received by the developer, according to the board agenda.

If the Cusack-Lyon company spends $2.8 million on capital improvements within 18 months, $100,000 of the city’s loan will be forgiven.

The Senator Theatre sale is the Board of Estimates’ second high-profile real estate dealing in as many weeks.

Last week, the board decided to amend the lease on Harborplace, the Inner Harbor’s waterfront mall. The lease was extended 33 years, through 2087.

As consideration for the extension, the mall’s developer, Harbor Place Associates Limited Partnership, agreed to replace the exterior awnings, improve the interior and exterior lighting, repair the sidewalks and pedestrian bridge, and landscape the street side of the mall.

The developer has also agreed to pay more in rent for the two Harborplace pavilions.

In each of the past five years, the city has taken in an average of $102,000 from leasing the mall, according to the Board of Estimates.

Under the amended lease, the developer will pay $262,000 each year until mid-2022, when the rent will increase 5 percent.

Browse pictures of Baltimore's historic theater over the years. After 17 months and $3.5 million in construction, the renovated and expanded Senator Theatre will reopen Oct. 10, 2013, with a screening of John Waters' "Hairspray" -- 25 years after the original film had its premiere at the North...

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